Paris Real Estate News

As the world markets spiral and speculation runs rampant, an impending "crisis" seems to be the somber thought on everyone's mind. Burdened with the very public failures of several international financial institutions, along with the baggage of the existing lending crisis facing many parts of the developed world, the global markets have been sent into a tailspin of epic proportions.

The Paris property market has not yet been affected by the financial crisis for many of the reasons outlined in last month’s newsletter [which you can read here]. This has not, however, stopped negative speculation from spreading regarding the future of the market and the facility of obtaining a mortgage. Consequentially many potential purchasers feel wary about purchasing property here. The at times sensationalist press coverage has certainly heightened the already elevated level of anxiety expressed by many in the City of Lights, but is there any substance to it?

France has only recently begun to suffer from the financial problems plaguing so many other nations, but already the country stands out for how well it has weathered this financial storm.

According to the BBC, "only about a quarter of [French] banking activity is related to investment banking and dealer-broker activity; the rest is all to do with retail banking. This meant that when the credit crunch bit, the French banks were hit a lot less hard than those in many other countries." French investors have historically shied away from the property markets, "which meant that when the American sub-prime market collapsed, it did not drag the French market with it." [To continue reading this BBC's article click here.]

In spite of the general public's fear that the market will inevitably dip in the future, the local property press has taken a positive stance. "France clearly has something different to offer," says Assetz Property News. "The country may be able to offer something that is more solid, stable, and reliable in the long run than most markets." Assetz has published figures that show France continuing to gain on its annual increase. [To read more from Assetz click here]

In addition to the real estate industry insiders, outside organizations such as the Association of Notaires have released data that confirms what many have believed to be true, namely that Paris continues to show growth throughout the different areas of the city. According to the notaire figures every arrondissement increased in property value over the course of the past year, with some neighborhood values increasing over 20%.

The negative speculation in the press may have actually helped the market as it has led to fewer consumers applying for home mortgages making it difficult for banks to meet their quotas and so has pushed their hands to offer more attractive deals to their clients. Borrowing remains a strategic option as it may not always be so easy in the future and should rates lower it would allow you to repurchase at a better rate, and in the case of inflation (a more likely scenario under the Paulson bail-out) it would have been a winning move.

This growth appears to be entirely sustainable, but playing devil’s advocate, if the economic crises were to affect the City of Light, the impact of such repercussions would likely be quite limited. Incredibly high demand from foreign visitors, combined with their respective proximities to the city centre, means that the most central arrondissements would almost certainly retain their high value. These areas also remain very attractive for the French themselves. This influx of buyers from so many arenas has inspired great confidence in many individuals within the industry. For instance, Sextant Properties announced last week that "October promises to be busy in terms of French property sales" [Read more about property predictions and trends from Sextant by clicking here]

The only impact that the city would likely sustain if the economic crises was to hit would most likely be observed in only the outer arrondissements of Paris. Price levels in less desired apartments would be apt to fall, specifically in apartments located on lower levels or in very poor conditions. Investing in more sought after neighborhoods and purchasing premium flats is no doubt a positive way to combat such an occurrence for purchasers.

Potential buyers should rest assured that the amenities and location of premium apartments should ensure their future value for years to come, regardless of detrimental circumstances that could affect the rest of the country, and in worst cases certain areas of the capital. In this current financial crisis where it is better to turn to solid investments such as gold or real estate, Paris is a secure investment.

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